Why (Most) Data Lockers Are An Uphill Battle As A Marketing Tool

Some businesses see opportunity in flipping the assumption that Internet users are passive recipients of targeted advertising. The idea that they should be able to control their data and decide which companies to share it with has given rise to "data lockers" -- online accounts where people store their personal information and ideally provide more accurate information about their marketing preferences.

Thinking of data lockers as a preference-management or customer-engagement layer makes more sense than thinking of them as a data-privacy tool, said Forrester Research analyst Fatemeh Khatibloo.

“I don’t think this [data lockers] is going to take off because consumers are up in arms about privacy. I don’t think there’s enough traction there,” she said. “I think this takes off because we can do better for our customers. We can serve them better and do it more effectively and efficiently.”

Selling consumers and marketers on the value of peopl updating their own data has produced mixed results, however, with companies trying numerous ways to help consumers take an active role in maintaining their data.

Entrepreneurs Ginsu Yoon and Ian Wilkes created a browser add-on for Firefox and Chrome called “Bynamite” in 2009 that indicated which advertisers or ad networks were tracking you, and showed you your profile of interests as advertisers see it. Users had the option to then erase and block interests they didn’t want assigned to them. The company reportedly was also looking into a way to let account holders make money when a data broker buys their information.

However the San Francisco-based startup, which was angel investor-funded and had a partnership with data marketplace Brilig, folded before it got fully off the ground.

“To make a long story short, my co-founder and I have both received compelling offers to work at large Internet companies, offers that we don’t think rational people would refuse. Unfortunately, the companies involved do not want to purchase Bynamite,” Yoon wrote in a 2010 blog post titled “My Baby’s Not Ugly.”

Yoon, who was hired to be a product manager at Google while Wilkes went on to Facebook, lamented that he “couldn’t even get the company ‘acqhired.’” Yoon continued, “It’s important to own your failures, and this experience has certainly given me plenty to learn from.” When asked for additional comments, Yoon declined to discuss his experience running Bynamite.

Reputation.com is another startup that is attempting to help consumers take control of their data. The company offers ways to hide your personal information as well as to monitor sites that display information about you online. The company also plans to introduce a data vault in which Reputation.com will collect consumers’ marketing preferences and allow them to share that information with marketers in exchange for coupons and other benefits.

The data vault will be released either this year or the following year, according to PR director Leslie Hobbs. “The concept of the data vault is increasingly being introduced into our consumer product,” Hobbs wrote in an email. The vault will be “fully realized,” she added, “when we have transactions on behalf of our customers for their data and of which they are explicitly aware and for which they give their explicit consent.”

In contrast to helping consumers sell their data, Personal.com focuses on allowing people to store their personal information in one place, making it easier to fill out forms or register for new accounts. Users, for example, might set up a vault through Personal.com for filling out student financial-aid or insurance forms, or signing up for marketing offers.

Part of what makes the company’s vaults attractive is that users have the sole rights to the data in their vault, according to Josh Galper, chief policy officer and general counsel at Personal.com. “Once you have your vault, you can do what you want with it, but we’re not in the business of selling your information,” he said.

Personal.com charges $29.99 a year for an empty vault or account that users fill with their own data. The company also offers co-branded vaults through agreements with private and public organizations that offer the vaults to their own clients for free.

Galper declined to say how many customers the company has, but noted that the 4-year-old company recently received $4.5 million in a new round of funding, bringing its total funding to $20 million.

Operating a successful data locker company means overcoming scale and monetization issues, which some companies have decided to sidestep by offering alternative services. Instead of offering data lockers, huge firms like Acxiom and startups like Enliken are betting that showing consumers the data that has been collected about them will spur consumers to correct inaccuracies that can potentially be used to improve marketing efforts.

Acxiom built a website, Aboutthedata.com that gives users a glimpse into the demographic data and other information that the data giant has collected about them and gives them the opportunity to make corrections. Other than anecdotal examples about the database’s inaccuracies, there has been little information about its benefits, however.

Enliken is a 2-year-old company headquartered in New York City that recently launched software allowing consumers see demographic information and other data that marketers are collecting about them.

Similar to the tools that data providers like Exelate and BlueKai offer to reveal in which audience segments consumers have been placed, Enliken’s software shows demographic categories, shopping categories and other data a company has collected about a consumer.

Enliken offers a cookie sync or API that “syncs to the customer dashboard of a company like Brilig or Datalogix so that they can show people that they’re transparent about their data,” said Enliken CEO and founder Marc Guldimann. “We think that transparency is a simple and elegant solution to many of the digital marketer’s problems.”